About Currency Currents

With Currency Currents, you can stay tuned-in to our current global-macro view and our analysis of key investment themes driving currency prices.

We consistently focus on the key asset classes responsible for the flow of global capital -- including equities, fixed income, commodities and, of course, currencies.

Nothing is off limits to us in this free-wheeling look at the markets. Some days you’ll receive ramblings on trading psychology, while other days we may take an academic approach in explaining esoteric economic issues. Ultimately we have one goal in mind: to help you get a handle on the key investment themes driving global capital flow. Because if you know where the money is going, it increases the probability that your position in the market will be a profitable one.

Who is Jack the Pipper?

Jack is founder and president of Black Swan Capital LLC. He has also
operated a discretionary money management firm specializing in global
stock, bond, and currency asset management for retail clients. In
addition, he was general partner in a firm specializing in currency
futures and commodities trading. Neither firm is now in operation.

Prior to entering the investment arena, Jack worked in various
corporate finance positions. He has written extensively on the subject
of global currencies and international economics.

October 2008 Monthly Archive

Does the ‘establishment of temporary reciprocal currency arrangements’ mean anything to you? Yeah, it kind of went by me in a blur the first time I read it. Basically, this has become one of the side shows for the Federal Reserve.
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The conspiracy crowd is working overtime these days. Many “deep thinkers” among the gold crowd still spout conspiracy stuff on a regular basis to help explain why their beloved metal is not now sitting at least $2,000 an ounce.
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Ahhh, let’s see … recent buzz words in the investor vernacular have been risky assets, subprime, inflation, decoupling, current account, globalization … and the list goes on. The newest buzz word to make the list: deleveraging.
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Though we luckily have not had the experience, and the physical pain is obviously different, this move in the dollar today seems to us the psychological equivalent to being chomped on by a 20 ft. long white shark. Blam!
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If you’re a currency trader that became tired of only hearing about interest rates … or tired of only hearing about the carry-trade dynamic … or tired of only hearing about yield differential as the primary force impacting the foreign exchange market, then the global lending crisis and impending economic meltdown has offered a refreshing change of pace!
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I received an email yesterday, from a very smart man who happens to be a professor of sciences in one our top institutions. He wrote: “Been stunned by the number of free market folks who squeal for interventions.
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Interesting! It seems the chances for another Asian-style financial crisis lingers and is rising (we are already seeing it in S. Korea; chart below). This is surprising since it appeared the entire region was well position to whether a downturn in the major economies–at least the view before the downturn morphed into an all out assault on all the ties that seem to bind the global financial system together.
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Looks like someone popped the champagne cork too early. I say that because stocks made short order of Monday’s record climb. On Wednesday, the Dow dropped the most in 21 years. The plunge of over 700 points erased over a trillion dollars in market capitalization – only the second time that’s happened … ever.
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Of course we wouldn’t ask the question if we didn’t believe the chances are good. But, the major caveat is the same we’ve shared before–in a fundamentally-driven market (or major event-driven) the technical analysis takes a back seat.
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Last week there was a huge cooperative among the world’s central banks to cut interest rates. Central Banks in the US, UK, Sweden, Eurozone, Switzerland, China, South Korea, Taiwan and Hong Kong all got involved.
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I guess that little coordinated interest rate cut thing didn’t do the trick. But don’t despair citizens. Right now he’s strapping on his cape to prepare for yet another episode of “The US Treasury Saves the World” news conference to explain why the latest scheme hatched in the last 15-minutes will be just the ticket.
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As the stock market goes, so goes the euro against the US dollar. Can it be that simple? Short answer is yes. Risk aversion right now is dollar positive. And falling stocks are the best general definer of a risk adverse environment
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The Federal Reserve cut their benchmark interest rate by 50 basis points today.And so did the European Central Bank …And so did the Swedish Riksbank …And so did the Bank of England …And so did the Bank of Canada …
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After pumping tens of billions of euros and dollars into its financial system over just the last two weeks, the ECB couldn’t muster up enough energy to cut rates today. The ECB left their benchmark lending rate sitting at 4.25% after they concluded their policy meeting this morning.
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We are guessing the “momentous historical development” that launches the US dollar into a new multi-year bull trend was the credit crunch. It is a game changer on risk appetite and correlation of every asset class (but the dollar) going up at the same time, as the dollar credit was the driver
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